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Why Congress should not get out of the way of the Postal Service

November 23, 2014

BY MARK JAMISON

News that Ron Johnson, the Tea Party favorite from Wisconsin, will be taking over as chair of the Senate committee on Homeland Security & Governmental Affairs has caused an overwhelming sense of panic among progressives and postal workers.  Johnson will control oversight of the Postal Service in the Senate.

There may be good reason to think this has the makings of disaster.  Johnson is on the record stating that it would be a good idea if the Postal Service went into bankruptcy and got privatized.  His training is in accounting, but he has refused, with an aggressive ignorance, to acknowledge the basic tenets of accounting.  When witnesses come before his committee, he bullies them and waves his arm abrasively.  His dislike of unions is so intense he’s willing to set aside his worship of the business principles of a contract to concoct a bankruptcy scheme to abrogate postal labor agreements. 

But is the coming of Ron Johnson any reason to panic?

Tom Coburn, the current ranking member on the committee, has said virtually all of the same things as Johnson (in his quiet, deadly way).   Several of the other Republicans on the committee — Rand Paul, Mike Enzi, and Kelly Ayotte — have also said many of the same things Johnson has.  All of them have shown a disdain for the Postal Service as an institution.  All of them have questioned the Postal Service role as a national infrastructure.

Never mind too that Tom Carper, the Democrat from Delaware and current chair of the committee, has endorsed virtually every cut, every closure, every act of outsourcing that PMG Donahoe has engaged in or even imagined.  On postal matters, his views are not that far from Johnson’s. 

 

It could be the end

While Ron Johnson will probably just carry on like Carper, Coburn, and the other Republicans on the committee overseeing the Postal Service, the specter of Senator Johnson as chair is haunting progressives. 

The sky is falling at Think Progress, where Kira Lerner tells us that with Johnson “it could be the end of the Postal Service as we know it.”  Lerner therefore hopes that Congress passes legislation — any legislation at all, bad as it might be — before Johnson can pass something worse.

But how likely is that the any legislation to come out of a lame duck session will be any good?  Anything likely to come out of the Senate would carve in stone the current agenda of cuts to the workforce, reductions in service, and secret NSA agreements.  Plus, any bill passed by the Senate would have to go to conference with whatever Darrell Issa comes up with in the House.  The result will be further degradation of the postal network.  There’s little chance it will make those who care about postal services in this country very happy. 

Over at Daily Kos, Laura Clawson seems just as frightened of Johnson as Lerner is.  Faced with Johnson’s statement that the Postal Service should go through a bankruptcy process, Clawson says, “Another solution is for Congress to get out of the way of the Postal Service making money providing needed services like banking for tens of millions of people who don't have access to financial institutions.”

Postal banking might be useful for the millions of unbanked citizens, but it’s worth giving this notion of “getting Congress out of the way” a bit more thought.  The idea seems to be almost everyone’s answer for what ails the Postal Service.  Blaming Congress is apparently something that folks everywhere on the political spectrum can agree on. 

That should come as no surprise, considering that Congress has become less popular than a shady used car salesman.  But would all be right with the Postal Service if Congress just got out of the way?

The answer to that depends a lot on what you want the Postal Service to do with its newfound freedom.

 

We don’t care, we don’t have to, we’re the Postal Service

May 8, 2014

MARK JAMISON

It looks like the folks in L’Enfant Plaza will be the last to acknowledge what everyone else in the country already knows — customer service at the Postal Service is going way down hill, and fast. 

The plant consolidations have resulted in delayed mail, late delivery, and countless other service problems.  Under POStPlan, service has declined due to reducing hours at post offices and replacing experienced postmasters with poorly trained and underpaid personnel.  The shift from door and curb delivery to cluster boxes has confused and angered thousands of customers.  When customers try calling to complain, they can’t even get hold of their local post office.

Everyday there are news reports about such problems.  Postal officials say they’re just trying to make the system more “efficient” and to act “like a business,” but what they’re doing is taking the “service” out of Postal Service.  When they’re done, we’re going to end up with a United State Postal Corporation, and customer service is not going to be high on the agenda. 

 

Inventive interpretations

Much of the problem has to do with the way policies and initiatives that come out of postal headquarters get interpreted in the field.  As much as the Postal Service is a top-down autocracy that tries to micromanage everything, many senior and mid-level managers at the district and local level can get quite creative about how they understand directives from above.  In their zeal to please their superiors, employees can end up interpreting policies and regulations in ways that make very little sense. 

For example, it’s well known that the folks at headquarters would like to see a shift from door delivery to cluster boxes, but it’s postal policy not to change a customer’s mode of delivery without permission.  Nonetheless, last year the managers in the North Florida District decided to negotiate with the government agency that oversees Jekyll Island, Georgia, and together they decided that the island could keep its post office only if residents gave up door delivery — without getting the residents’ approval for the change.

In Freistatt, Missouri, Rick Belcher, the POOM representing the Mid-Americas District, decided that cluster boxes were the only alternative form of delivery that would be made available to residents after their local post office was closed because of a lease issue. This was in spite of the fact that rural curb delivery was already available throughout the area.

Then there was the story about the book publisher in Virginia who was told by a local manager that he could no longer use Media Mail to send his books — even though he’d been mailing that way for 22 years.  His customers, by the way, are members of the military.

Giving away the store: The Postal Service discounts the mail

April 20, 2014

MARK JAMISON

In her book Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, Susan Crawford describes how the American public has been imprisoned by monopoly arrangements in the delivery of broadband and wireless Internet services. Using pricing and discount strategies, communications corporations have colluded to circumvent competition and make private fiefdoms out of what should have been public infrastructure.  

It’s not a new strategy.  Back in the 1870’s, J.P. Morgan and the railroad barons worked with John D. Rockefeller and Standard Oil to use preferential pricing schemes and discounts to corner markets and consolidate their monopoly powers.

In its quest to act more like one of these giant corporations, the Postal Service has been using similar strategies, like fighting off regulation, making secret deals, manipulating prices, and offering discounts to become more competitive. 

Worksharing is probably the most notorious example of a discount of dubious merit.  Since the practice began in 1976, worksharing has grown dramatically.  Now about 80 percent of the mail arrives at the Postal Service pre-sorted to qualify for discount rates (as discussed in this OIG report).  Worksharing has spawned a huge private-sector consolidation industry that profits off the $15 billion (or more) in discounts that the Postal Service gives out each year.  As repeatedly documented in compliance determination reports by the Postal Regulatory Commission, many of the discounts are so large that they don't even cover their avoided costs.  Worksharing has led to the loss of tens of thousands of postal jobs.

Worksharing is not the only type of discount to be concerned about, however.  For large mailers, there are discounts for bar coding and an ever-increasing number of Negotiated Service Agreements.  For average customers, discounts are available for going online instead of going to the post office.  Now we’ve learned that the Postal Service is apparently giving discounts to Staples as part of the plan to put postal counters in big box stores.

Through the use of such discounts, the Postal Service has transferred large parts of its operations to the private sector.  Besides undermining postal jobs and the postal network, these discounts also threaten to create significant unregulated monopoly power in the communication, mail, and package delivery sector.

The Postal Service may say that the discounts are just good for business and that going online or using a postal counter in Staples is just more convenient for customers, but the real goal is to get rid of post offices, postal workers, and postal infrastructure.  From worksharing to Staples, the discounts mean one thing: The Postal Service is giving away the store. 

 

Discounts to Staples

Putting postal counters in Staples stores is clearly intended to replace postal workers in brick-and-mortar post offices.  The only way the deal can save the Postal Service any money is by reducing the number of clerks at nearby post offices and then closing post offices completely.  Maybe that’s why one of the provisions in Darrell Issa’s postal reform legislation removes the right to appeal a post office closure to the PRC if there’s a Contract Postal Unit within two miles of the post office.  There are over 1,200 post offices within a couple of miles of a Staples store. 

But there’s another aspect to the Staples deal that hasn’t got much attention.  The Postal Service is apparently giving Staples discounts on Priority and Express mail, domestic and global. 

These discounts have not been discussed publicly by the Postal Service, and the details are a closely guarded secret.  The APWU filed a complaint against the Postal Service and requested more information about the deal, including a copy of the Staples contract.  It received a long document of 58 pages, almost all of it blacked out.  (The APWU posted it here.)

Not everything in the document was redacted, however, and there was enough left to allow us to do a little detective work, which led to two PRC dockets covering Negotiated Service Agreements.  In comparing the APWU version and the PRC version of the documents, it seems almost certain that these NSAs involve the Staples counters.  (You can see some of the points of comparison here.)

Docket CP2013-84 covers an NSA for reselling Global Priority and Express mail, and CP2014-3 deals with an NSA for reselling domestic Priority and Priority Express.  If these indeed are the NSAs for the Staples deal, they tell us that one of the ways Staples is making money on its postal counters is by receiving commercial-based discounts on Priority and Express items.  We don’t know how much those discounts are, but one might reasonably conclude they are even more generous than those offered Click-N-Ship customers on the Postal Service website, which can be as much as 16 percent off retail. 

The masquerade continues: Playing politics with the Postal Service's unfunded liabilities

March 17, 2014

MARK JAMISON

The House subcommittee on Federal Workforce, US Postal Service, & the Census held a hearing on Thursday, March 13to receive testimony on the Postal Service’s $100 billion “unfunded liability.”  Initially the hearing was billed as another Darrell Issa special.  Issa is chairman of the Oversight and Government Reform Committee, under which this subcommittee serves, and the hearings he has scheduled to look into controversies and scandal  — real, imagined, or manufactured — have become notorious for showcasing Issa’s brand of political theater and for their pure entertainment value.

Thursday’s hearing was not chaired by Issa, though, and he was nowhere to be seen.  The subcommittee is chaired by Blake Farenthold, a Tea Party favorite from Texas, and his hearing turned out to be rather anticlimactic.  (The video is here.)

Billed as an inquiry into the Postal Service's large and troubling unfunded liabilities, the hearing featured Frank Todisco, the chief actuary from GAO and a regular at postal related hearings.  Jeffrey Williamson, the Chief Human Resources Officer and Executive Vice-President of the Postal Service, was also on hand, as were two actuaries from the Department of Defense (don’t ask why).  Their written statements can be found here.

The centerpiece of the Postal Service’s ongoing financial crisis has been the idea that the agency has accumulated large unfunded liabilities that threaten its very existence.  We are given to believe that the ratepayers, postal employees and retirees, and, God forbid, the taxpayers may be on the hook for billions of dollars of liabilities.  In order to justify their agenda, the downsizers and dismantlers make these liabilities sound as dangerous and threatening as possible, even though the obligations represent decades of costs – in some cases as much as 75 years.

The fact is that the Postal Service is in the situation it’s in today largely because Congress created funding schedules and funding levels for pension and retiree healthcare obligations that exceeded standard accounting practice.  Only the most naïve or ideologically predisposed observer would believe that the way these obligations have been presented and accounted for represents anything other than an attempt to put the Postal Service in the most damaging financial straits possible.

The history of these obligations is long and well known.  We’ve discussed the nature of these liabilities here at STPO many times, including in this recent post that detailed the latest attempts to gin up hysteria through the use of emotionally charged words like “bailout”, “bankruptcy,” and “default.” Rather than repeat the same story again, perhaps it would be useful to take a step back and look at what these obligations represent and what dangers they really present.

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